Employment Update, Italy - September 2008

As recently reported, law 230 of 1962 on fixed-term contracts was entirely changed in 2001 by law 368 and since then has been amended several times.The latest amendment had provided that employment contracts for an indefinite term were nevertheless to be considered a normal contract.

Both laws, the new and the old one, provided that where there had been a misuse of fixed term contracts by an employer, an order would be issued to hire the employee concerned permanently.

No change has been as significant and discussed as the latest one, approved by Parliament on August 5 2008, after the Government had asked for vote of confidence and after an express warning that the new law was against the Constitutional principle of equality.

New legislation

Under the new law, in all pending proceedings (of any degree) related to misuse of fixed term contracts by employers, instead of awarding the employee the right to indefinite term employment, judges will only apply a penalty ranging between 2.5 and 6 months salary. This new law does not apply to definitive judgements (against which no appeal is given), and is limited to proceedings already pending at the time of the approval of the new law.

This means that thousand of employees, most of which were hired on the basis of several fixed term contracts, and who were expecting to be hired on an indefinite term (due to evidence given of the misuse of a fixed term contract), will now just get an indemnity and be left without any permanent job. The indemnity corresponds to the minimum lower degree protection granted to employees in offices and premises with less than 15 employees.

The interesting point is that, when criticized for this new law, the Government pointed out that it will apply to just a “few cases” as if the fundamental rule, under which legislation should have a general character and not be focused on specific cases, had been fully abandoned by this Government, not only with reference to the immunity of Mr Berlusconi, but as a general principle.

Ultimately, the “few” cases are not really few and they are specifically concentrated at the Italian Mail who, in the last few years, avoided any fixed term hiring by misusing temporary contracts, which were then renovated or repeated for years. Employees who miss out on protection against termination, since they are always under the threat of not getting a new fixed term contract, have now lost the chance to be awarded indefinite term employment.

Effect on employers

Employers are in fact now, under the new law, also entitled to use fixed term contracts for “normal” activity, while the previous legislation limited fixed term contracts to specific cases, which were related to exceptional cases.

Cases

Part-time contracts: no more copies to the Employment Offices!

Background

Under Italian law 61 of 2000, employers are under an obligation to send a copy of any part-time employment contract to the employment office within 30 days from signing it.

Facts

The ECJ has considered such an obligation an unreasonable obstacle to part-time work, (within the meaning of clause 5 of the framework agreement) due to the fact that there is no indication that full time contracts are subject to comparable obligations.

In addition to this, the ECJ has considered that the Italian Government has plenty of different and more proportionate instruments if the point is to avoid that employment contracts are not declared.

Effect on employers

Any sanction applied to employers related to the previous obligation is void. Any employer, who does not comply with this obligation, can no more be subject to related sanctions. Employers, who have been given notice of such a sanction and have not yet paid, may challenge the sanction and will be entitled to ask for the sanction to be voided (€15 per employee and per each day of delay).